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What is Retirement?

I just returned from my annual weekend trip to Oregon’s Opal Creek Wilderness area. Every year, I join five other friends to hike into the forest, pitch our tents on the banks of the creek, and sit around the fire talking about life. We drank a lot of whiskey this year, and spent a lot of time at the swimming hole.

Paul and Tim at rest above the Opal Creek swimming hole

This year, we also talked a lot about where we’re going in life. All six of us are about 40 years old, and we’re all dealing with career transitions of some sort. We chatted about “talkers and doers” (a topic I hope to write about soon), about building social capital, and about retirement. I mentioned that my wife hopes to retire when she’s 52, and that caused a lot of envy. It also prompted an interesting discussion on Sunday afternoon.

Paul, Tim, and Andrew chatting around the campfire

“How do you define retirement?” Paul asked as he and I climbed into his truck to start the long drive home. “And when do you plan to retire?”

I thought for a moment. “Are those rhetorical questions?” I asked. “Or are you really asking me when I plan to retire?”

“I’m asking you when you plan to retire,” Paul said. “Because in a lot of ways, you already seem retired. You do what you want when you want. You have time to travel and to pursue your hobbies and that sort of thing. Yet when I think of you, I don’t think of you as retired — I think of you as working.”

I had to think about this some more. “I don’t know,” I said at last. “I’m not sure I know what retirement is, and I don’t know when I plan to retire.”

“The thing is,” I said, “none of my family ever retired. Well, that’s not true — my mother’s father retired, but I didn’t know him well. On my dad’s side of the family, the side I really know, nobody retired. Part of that was because so many of them died young. They never got a chance to retire. But I remember that when my grandpa — who worked as a janitor at the high school — when he ‘retired’, he still worked. He didn’t work for money, but he ran a working farm until he was 75 or 80 years old.”

Then I realized I could be clever. If I couldn’t define retirement, if I couldn’t say when I wanted to retire, maybe Paul could. So I asked him. “What does retirement mean to you?” I said.

“Well, to me retirement is not having to do something for money,” Paul said. “If I was working at one thing and wanted to do something else, I could do it and not have to worry.”

“That sounds like Financial Independence,” I said (though I couldn’t capitalize the “F” and the “I” while speaking). “Actually, that’s a good way to look at retirement. In many ways, Financial Independence and retirement are the same thing. They both mean that you have enough money that you can afford to do what you want, right?”

Paul nodded. “Sometimes I think that retirement isn’t about the money,” he said. “The thing I wish I had is more time. I spend too much time doing things I don’t want to do for money. I guess I could have time to do the stuff I want, but to do so would require more sacrifices than I’m willing to make. I’m frugal, but I have limits. If I could make money doing something I enjoy, I wouldn’t have to retire. And that’s what it seems like you do.”

“Ahhh…” I said. Now I could see why Paul had asked the original question, why he wanted to know my definition of retirement and when I planned to retire. To him, I was already living the sort of life that he wants when he retires.

Paul continued: “I’ve been talking with Tiffany” — his girlfriend, and my wife’s sister — “and I’ve been wondering: What if I got to a point where yes, I had to work, but I could choose any job I wanted, even if it paid minimum wage? Maybe I could work in a music store.”

“Right,” I said. “I know what you mean. And actually, you’ve sort of hit on something that’s in one of my favorite books. It’s called Work Less, Live More by Bob Clyatt. It’s all about what he calls ‘semi-retirement’. Semi-retirement is like early retirement except that you’d continue to earn money from sort of work. I think it’s much more realistic for most people than a traditional retirement.”

“I’ll have to check it out,” Paul said.

“You know, I’m going to have to write about this conversation,” I said. “And when I do, I’ll add a bit of detail about semi-retirement from the book.”

A bit of detail

In Work Less, Live More, Bob Clyatt explains the advantages of semi-retirement:

“With a modest income from part-time work, early semi-retirees may not have to face the dramatic downshifting in spending and lifestyle that so often confronts those who live only on savings or pensions. And semi-retirees learn that a reasonable amount of work, even unpaid work, keeps them energized, contributing, and sharp.”

Though semi-retirement is more realistic than early retirement for most people, it’s still not for the faint of heart. You have to be dedicated and work hard to make it happen. Semi-retirement usually requires ample savings, frugal living, ongoing work, exploration, and a sense of purpose.

“I don’t know when I want to retire,” I said. “But I don’t think of myself as retired now, though I can see why it might look that way. To be honest, I don’t want to retire. I have purpose now, and I like it. For so long, my life had no purpose, and I think that’s why I struggled with depression. Having purpose has changed my life, has giving me a sense of meaning.”

“Good point,” I said. “You’re right. And actually, I think it’s very important for everyone to find some sort of purpose, whether they’re retired or not.”

Just then, we reached the Gingerbread House, our pit stop for lunch. We went inside and ordered our burgers and malted milkshakes (Paul ordered double malt), and as the rest of the group arrived our conversation turned from retirement to more mundane things. Plus, we all hunched over our iPhones, catching up on 48 hours of e-mail and text messages.

Later in the day, I thought more about our conversation. The more I think about it, the more it seems that the traditional notion of retirement is something like a mirage. It’s not real. When I think about the people I know who have “retired”, I see that they’ve really just gently transitioned into some other phase of life, usually pursuing something they’re passionate about.

Ultimately, deciding when and how to leave the workforce isn’t about some number in a retirement account. It’s important for each of us to think about our goals and what makes us happy. So, when will I retire? Maybe if I’m lucky, I never will. I’ll just keep doing what I’m doing because it makes me happy and gives me a sense of purpose.

It’s funny (or maybe sad) – it seems like most folks understand that retirement is about pursuing passions and have the freedom to choose whether you want to work full time or not; however, it also seems that the vast majority of Americans don’t make it to that point.

They work because they have to, or because they didn’t plan enough or save enough or whatever other reason there may be.

Is it because we talk more than we act? Maybe it’s because it takes hard work and discipline to get ourselves in position to “retire” when we want, how we want.

Or, perhaps we get so caught up in the American Dream and chasing our neighbors and coworkers lifestyles that we miss the point…

That True Wealth is not about commas or net worth -it’s about the quality of relationships, pursuing your passions and living life with purpose!

My wife and I retired in May 2009 at age 56. People ask us, What do you do all day? Whatever we want, is the answer. We are both self-directed people with plenty of interests to keep us busy. We had lives outside of work while we were working. We now how more time for those lives, that’s all.

We’ve always lived well beneath our means, so there was no change in lifestyle when we retired. We just save a lot less money now.

My wife is a retired teacher, but she finds opportunities to “teach”. I’m a salesman. I’ve kept my hand in sales. We just don’t spend fifty hours a week at these endeavors anymore.

I think you’re bang-on when you talk about purpose; that really made me think of how Bill Gates retired. He didn’t leave Microsoft because he hated doing it or because he didn’t still enjoy managing people and making extremely important decisions. He left Microsoft so that he could devote his time to charities and making the world a better place.

I’m still a long, long way from retirement, but that’s definitely something I’d like to remember in 40 years or so.

I have to say my husband and I get looks like we have 3 heads when we say we are going to retire in 10 to 15 years (we are 29 and 30 now). LOL. Since we don’t have children (and definately don’t plan on having any in the future!), that obviously automatically negates having a retirement traveling around the country to see grandkids. LOL. Our version of retirement is actually opening a horse farm in a small town just outside a major state college in the midwest. If both of us teach there, even as part time adjucts, so we are still in our respective fields, we will run our horse farm because we want to. We also want to be a foster home to older teenagers who have been in the foster care system for several years. Give them a home, teach them about riding and responsibility, and maybe give them the idea they can go to college! So our retirement will have a purpose, and we will work because we want to, and granted this is the same as financial independence, which is ultimately our goal. We live a frugal life (but not by some other readers’ standards! My hats off to some of you guys!), and we save approximately 40% of our total net income. So our retirement is more a working retirement, but it is doing something that rejuvenates and fills the soul as oppose to the bank account!

Retirement to me means to do whatever I want whenever I want. If my wife and I want to take off for a few days in the car so be it. If we want to watch 2 movies in one day with lunch in-between, cool. Might even exercise and lose some weight. Semi retirement would work for me too. Work 2 or 3 days a week, to keep benefits and cover expenses so be it.

My roadmap to get there: be debt free specifically the mortgage, have enough dividend stocks that will pay the expenses and the part time job for extra spending money and to keep the benefits.

Nice photos. Do your friends ever tell you “Don’t write about this or me, on your blog?” lol You know I’m just kidding right?

Its funny that you published a post about retirement, because I just paid off all my debt so I’m thinking about my next financial goals in life. I want to finish my bachelor’s degree, I’m 27, but I also want to focus on retirement and traveling. I’ve become very frustrated at a lot of retirement advice out there.

There is so much advice out there, a lot of the experts don’t even agree with each other. Some say to save $1 million. Someone else comes in and says “that’s not enough, you need at least $4 million.” Some finance journalists say that Americans are saving too much and need to live it up a little.

Bob’s advice seems to be written for people who didn’t really think about retirement until their later years. There are some people who won’t be able to retire because of poor financial choices early in life and it seems that he is trying to reach those people with that book.

I’m not trying to be rude or anything, but I didn’t really care for Bob’s book while its very well written because I really don’t like the idea of working part-time as a senior. I really don’t.

And you know a lot of finance journalists are starting to realize that a lot of people won’t be able to retire completely so they’re telling them that full-retirement is out of the reach. But I really don’t want to work until old age.

It seems that if people want to retire well they have to live below their means throughout their lives even in their 20s and 30s, buy only as much house as they need even with a family and not any more, and to avoid debt. It also helps if you go against the norm and choose a state with low cost of living.

That way when they get older they don’t have to worry about downsizing and having a shock to their lifestyle. They can just carry on because they always lived below their means so retiring isn’t going to be such a shock to their pocketbook. I know because my parents are doing this and no they’re not miserable. They are happy.

Then there are the people who irritate me and blame Obama, Bush, Clinton, Mccain, their governor, some other politician, the social security administration, etc. for reducing their retirement savings, etc.

I really hate this because its not a politician’s job to coddle Americans. I mean really, unless someone is mentally disabled or have some disease like dementia, its really our job to take care of ourselves. To me retirement means having enough money for my needs, wants and some luxuries without working for a paycheck. Although to me a luxury is traveling and not shopping for leisure.

Also what is up with financial journalists that tell you to save $4 million for retirement. Seriously. Aside from the basic needs and wants and some luxuries, where else would I use that money on? I don’t intend on using it on mansions, yachts or shopping at Chanel.

Even if I were a multimillionaire, buying stuff gets old (I know I used to be in debt) and you need something more interesting to do in life besides own stuff. I think some people fear retirement because it means the end of an era, but people are not their jobs.

Sometimes I cringe when people say they love their job and don’t want to retire. I think its important to have skills so that you can go anywhere in the world and do whatever you did before even if you are retired.

It seems that people fear retirement because it means that they’re not valuable anymore, that what they did can’t be done somewhere else in the world and that’s not true. You can always use what you learned as a career somewhere else in life.

A write can always write, a nurse can always get licensed somewhere else, an accountant can help others with their money even after they retired from their accounting job at a corporation.

Some people choose to do nothing in retirement and others like being active. I think its different for everyone, anyway thanks for letting me vent.

Brenton-my mom has a business that she’s going to sell soon, if a person saves during the “fat” years of their business, then they don’t always have to work for another 15 years.

My mom is basically done with her business and wants to be retired already, my step-dad is already retired so she just wants to join him. JD has said that he saves, so I don’t think that he will have to go back to the box business should something happen to GRS, since he has savings then he should be just fine.

Also if a person saves more than they spend throughout good economic times, then they can do very well during lean economic times. I think its possible to save more than 10% of ones paycheck. Its all about controlling spending and avoiding all debt.

Besides writing is like any other profession, writers can find work writing about something else.

Tyler K- I disagree with you. I’m 27 and I learned you don’t have to do things you don’t want to do. I don’t have to work, I could be on welfare but I’m not, I CHOOSE to work. I don’t spend time with distant relatives. Why should I? It never made me happy to spend time with people that I wasn’t close to. I’m nice to everyone but I only spend time with my closest cousins and aunties and uncles.

I go to the DMV because I like driving my car and its not something that makes me miserable. In fact nothing in this world tells you that you need to drive, you could easily take the bus or a bike. That is a choice, not an obligation. When I got into debt that was a choice too. I got out of debt because I wanted it badly enough and have No debt anymore.

I’m saving for retirement because I want to make sure my basic needs and basic wants get covered. I don’t buy a lot of stuff anymore and that is a choice. I have chosen to be a minimalist after getting out of debt. I chose to move from the very active West Coast to a quiet mid-west state because there are jobs here and the cost of living is more affordable. Life is about choices. Life doesn’t have to be about despair.

A lot of obligations that you mention don’t have to be obligations if you don’t want them to be.

“The more I think about it, the more it seems that the traditional notion of retirement is something like a mirage. It’s not real.”

I was about to say that you’re right in the current economy, which makes retirement a very sketchy matter indeed. However, on reflection it strikes me that “mirage” has been the operative term for a lot longer than we think.

My father, a merchant mariner, retired in 1962, thinking he was set for life. He’d reached his lifelong savings goal at 53, after 36 years of very hard work, assiduous saving, and stringent frugality.

Within a year or two he went back to sea, not (I think) because he wanted to but because he felt he needed more money…and, I suspect, because life on land was less idyllic than he anticipated. When a health problem forced him to quit again, he did OK in retirement until double-digit inflation struck during the 1970s. That decade’s inflation effectively robbed him of his life savings, so that by the time it was over he had way too little to live on comfortably. Even though he remarried, after my mother died, and the new wife had a teacher’s pension as well as Social Security, together they didn’t have enough to live well.

I intend to keep on working part-time until I can’t dodder into the classroom anymore. Not because I want to, but because I don’t believe any amount of savings, short of eight or ten million dollars, is likely to retain its value long enough to support one through an extended period of old age.

Being laid off at age 26 last December gave me good insight as to what it is to retire.

Basically collecting unemployment checks (aka “Social Security”) and having all the time I wanted mirrored what retirement might be like decades down the road.

To me, it was a self-reflecting time. I was not sure how to productively use all of my time, and to be honest, I was usually bored. My wife still had her full time job so it was just me and my dog every day. To give me something to do, I walked my neighbor’s dog every weekday and did some house projects.

I believe there are lots of people who can’t wait to retire and not work, but the question really becomes besides work, what is your real purpose? What will you do with your time?

Some people might have a difficult time answering theses questions, I know I did. Lots will say well I will start a garden, travel, visit family. This will certainly take up some time, but I am not sure these folks realize just how MUCH time you will have.

I was 26 when I had to think of these questions and I still do not know the answer.

I have a job now that takes 10 hours of my weekdays away. What would I be doing with this time if not working? Hmmmm

Elaine– I agree with the poster who said to max out retirement accounts NOW if you’re planning on leaving the workforce early. When you’re early retired you can’t add to them anymore. You can always see where you are when you hit your 40s or 50s and stop contributing then. (That’s close to what we’re doing… though I’m getting the spending bug for the house…want… new… drapes… We’ll see if it lasts.)

The French have a concept of “third life”, the time when your major obligations of raising a family and contributing to society are finished, but your health hasn’t fallen apart yet. This is viewed as an incredibly creative place to be, where you can develop skills, learn something new, travel, etc. I like it better than retirement, and am looking forward to my third life.

Easing into it, I am starting back to school in the fall, to prepare for a new career which I will be able to pursue part time while traveling. We are also considering getting a conversion van, so we can travel without going broke. Planning for the third life is becoming as exciting as planning for our wedding, all those years ago!

This is a very interesting and thought provoking post. I tried retirement once about 9 years ago after 25 years of management and entrepreneurship. It lasted about a year until I was so bored I went back into the workforce. I didn’t go back into a supervisory postion nor did I start another business, but instead took a much less stressful individual producer role. I have also added my blog to my “work”. I don’t consider myself retired, but it sure feels like it to me. Quality of life is so important.

I agree with many folks who define retirement as not “having” to work. But I qualify that to add either “not working” or “choosing to work.”

If you don’t “have” to work based purely on the “math,” and maintain your current lifestyle easily off of the interest but for some reason (paranoia, fear), you keep working at a job you hate, that is not “choosing to work,” in my opinion. Those people are definitely NOT retired. But if you love your job and don’t need the money, you’re retired to me whether you work or not. (i.e The people I’m talking about could live off of a very, very low interest or dividends using current assets (not a complicated, overly risky or complicated investment “plan” that only works if everything goes right – if then.))

On the other end, if you COULD work, but CHOOSE NOT TO, instead claiming you’re “retired,” but in reality you “have” to work to live your life (without getting into crazy debt), you’re not retired to me.

One more thing – in the end I agree that it is personal. Some people see “retirement” as actually sitting on the beach with no worries. Others see it as starting a charity and giving back. Who am I to judge, I guess.

Retirement is having the ability to do whatever projects you want, regardless of the earn-ability of those projects.

My partner and I are working towards retirement. We’re both 40. I work for myself. He works for a company. We hope to have enough saved so that he can retire by the time he’s 50. I like to work, so I don’t intend on retiring until I’m in my 60′s somewhere. I also work by phone with many of my clients, so I can work anywhere.

So we’re learning how to sail, and we’re going to get a boat and sail all over the place, and I’m going to keep working “remotely”. He can do whatever he wants with his time, and I can do what I want with mine, which is my work.

Thank you so much for this post. I’m 25 and my husband is 28, and we recently had a discussion about retirement after attending a financial planning dinner. I am seeking ordination to the Episcopal priesthood, and my husband is an anesthesiologist, currently doing his residency. We both feel that we are called to our professions, and subsequently, don’t ever really plan on going into full retirement. My great-uncle, also a clergy-person, worked in churches until he died, but backed off substantially when he “retired”. Of course, we want to travel and not feel pressure to make money just to survive, but full retirement just does not appeal to us. Like your final quote about not retiring because you’re happy doing what you’re doing, that is our plan as well. Thank you.

I’m not sure exactly what to call it,maybe living on your own terms.
At 42, everything is paid off(including mortgage 3 years ago) I am a self employed contractor, love my job and customers, and can make enough money two to three days a week to provide enough to support my family if I wish. I have a 2 years of e-funds available if needed.My wife works part time at a job that she enjoys. I love having the freedom to either work like a dog if needed, or take a couple extra days off and enjoy my kids while they’re still young and still enjoy being with me.
Having said that, I realize after 20 years in the stock market that I’m not going to retire with 2 mill. in my portfolio. I’ll probably still be working to some degree at 70, that’s why I work out 6 days a week and live a healthy lifestyle.

JD,
I have been a reader for about a year. I have never posted, but I am glad I found your wisdom. Thanks for stopping at the Gingerbread House. I am from Northern California and my Grandparents took me there many times and now I take my son and husband there, it’s the pleasant smell of my childhood. I think most falsly equate retired as financially independent. I know that we are laking in that department. Thanks for the info so that we can slowly change our outcome.

I’ve been retired for 2 1/2 years now (retired at 44). If there was one myth I could dispel it would be this, that retirement somehow strips you of your inherent personality and makes you sit on the couch and watch TV all day. I mean sure, if you love TV and want to watch, go ahead. But anyone that says “I would hate to be retired and do (fill-in-the-blank) all day.” I wonder why the heck you would do (fill-in-the-blank) all day. Why not do something you love to do all day? If that’s work, fine, but really, I think you’d be able to come up with something else you love if you just gave yourself the chance.

Really, zombies do not come remove your brain the day you retire and put in a new one requiring you to involve yourself in activities you hate all day. Really!

if you hang out for any amount of time on one of the early retirement sites, you’ll see that people have different ideas and *strong* opinions about what retirement is and isn’t. for example, some believe you aren’t retired if you still work. which i think is ridiculous.

retirement means to me the same thing it means to your sister-in-law’s boyfriend .. the financial freedom to do whatever i want. and that includes working if i feel like it, whether i’m paid or not.

My definition of retired is simple. When you no longer go to work for an employer that requires you to pay Social Security, and Medicare out of your paycheck. If you are a blogger, and receive your income, you are required to pay those (along with the other 6.5% your “employer” pays as you are self employed). When you are no longer going to work, but still draw a pension (and thus pay those taxes), you are still retired as you don’t go to work. If you are living off investment income, but you have to work at it (ie. look at the stock market, etc.) you are still working.

@13-Elaine: have you thought about getting an annuity? It is a very simple financial tool for you to save today and transfer your longevity risk to an insurance company. There are many different options so you will need good advice from a trusted financial advisor. Remember that his job is to sell you an insurance product. Be sure to include an inflation adjustement, in particular if your annuity will only start many years from now. I would probably not put all my eggs in the same basket (ie I would split my annuity between 2 or 3 carriers) and choose only those with excellent ratings. All the best!

PS: for me, retirement is to retire from ny current job functions and responsabilities and to pursue other interests because I reached financial independance, i.e. I am no more dependant on a steay pay cheque from a corporate work contract. It is not to retire from Life. In fact, I will be taking some classes to get a certification in accounting, so that I can help people or non-profit organizations with the finances. It will take a few years to make the shift, and it will be gradual until I retire from my current job.

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